swombat.com

daily articles for founders

Daniel is the cofounder and MD of GrantTree, previously CTO/cofounder of Woobius and Vocalix, a full-time entrepreneur since 2007, and founder of swombat.com. I previously worked at Accenture and studied Physics at the University of Oxford.

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Swombat.com started off as an individual effort, but it's now becoming the work of a team (to be announced).

Together, on swombat.com, we summarise and comment on the best articles for founders each day, as well as occasionally post our own thoughts and advice, so you can read the most useful articles while focusing on building your own startup.

What's the best strategy to get from having no startup to having one that provides you with income?

Is it to find the best idea you have, focus all your energy on it, and make it work at all costs? This seems to be the standard mode of operation for most new entrepreneurs. They'll wait until they have an idea that they can pursue and that seems worth pursuing, and then pour all their energies into that idea. If it works, great. If the idea happens to be a stinker, they'll probably fail. Some might be lucky enough to know that they should validate the idea before pouring a year of development effort into it, and so find out the idea is not so good before all the money is gone.

Once upon a time, it used to be that starting a company and building a new product was a big and all-consuming affair (notice I'm not even talking about cost). If you were Henry Ford and you wanted to try out your new idea about car manufacturing, there was no way to do that without pouring most of your time into that one idea. Steve Jobs and Steve Wozniak had to put their heart and soul into building Apple for it to stand a chance. Granted, Woz also worked at HP at the same time, but it took more than 1 full-time person's attention to get Apple to the point where its potential for success was validated. Even today, many such businesses are still started. Dropbox, AirBNB or Spotify are not the kind of business that you can start with only part of one person's attention. You need several people to dedicate all their time to proving the idea, if you want it to stand a chance.

But is that true of all startup ideas? Clearly not. There are many ideas which you can validate very cheaply and without pouring all your time into them over a long period of time. They may not all be great, world-changing, visionary ideas, but they are still ideas that serve a purpose, fulfill a need, and have the potential to create value for both the founders and the customers.

Is that even true of most startup ideas? Do most startup ideas require a large up-front investment in time to validate that they could be good, worthwhile ideas?

The ever-shrinking minimum viable niche market

As I've argued before, the cost of starting a startup is always decreasing, or rather, the amount of stuff you can do for a given amount of money is always increasing. Let's consider a random niche "X", and let's assume it's a niche that is real (i.e. there is actually a need that could be served and that people would pay money for). 10 years ago, the process of validating the market for X and building a product to serve it would cost a large chunk of money and take all your time for a year.

Today, addressing the same niche would take considerably less money, because of all the tools and methods available to make software development more productive. Even validating the need would take less in both cost and effort, because of all the communication tools at our disposal. Moreover, that niche is probably somewhat bigger today than it was 10 years ago, because there are simply more people on the internet.

Ten years ago, the correct choice might have been to avoid niche X and find something bigger. Today, niche X could be served with a positive return on investment relatively quickly (if you can execute).

I propose that there are countless such micro-niches becoming viable every week, niches that were previously unviable but which are now worth having a shot at if you're looking to make a regular income by building software. These ideas will not make anyone a millionaire, but they are viable to build a sustainable small business that will free the founder(s) from the shackles of corporate work, and perhaps enable them to take a more risky moon-shot on their next venture.

A better time investment model

Some time ago, Chris Yeh wrote that impatience kills startups, and I replied that patience kills human beings. From an investor's point of view, it makes perfect sense that you should dedicate yourself body and soul to a single idea. And in fact, I would argue that you should not raise investment unless you are ready to dedicate yourself to that idea for the next 3-5 years.

However, when it comes to finding an idea to work on, there is no reason to work on a single idea at a time. And, if the ideas are small enough to be implementable by very small teams in a handful of months, there's also no reason why you can't build several of those ideas at the same time (or in quick alternation throughout the year).

If you want to maximise your chances of running a successful startup, where success is defined as achieving at least the "survival" level outlined in this article, and ideally the "comfort" level, it makes a lot more sense to invest your time in many ideas at the same time, test all of them (in parallel or one after the other) and then pursue the one or ones that are most promising.

Some people may accuse you of not committing to your ideas, and that's exactly what you're doing and what you should be doing. Given that ideas can be tested, explored, and sometimes built out into profitable businesses without committing to them to the exclusion of other ideas, committing to a single idea is irrational unless it's the kind of idea that simply requires full-time commitment. And if it is that kind of idea, it's inherently more risky - perhaps you should cut your teeth on a less risky idea.

If you are multi-skilled enough to be able to implement all startup aspects by yourself, you can then become an "army of one" entrepreneur, building multiple profitable products in parallel, turning the "several people work full time on a startup" equation on its head - and getting wealthy in the process.